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tv   The Profit  CNBC  July 31, 2013 1:00am-2:01am EDT

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>> across this country, small businesses are closing their doors, killing dreams and costing tens of thousands of jobs. i'm here to fix this business. my name is marcus lemonis. in the past ten years, i've bought hundreds of failing businesses, turned them around, and i've made millions doing it. i'll write whatever check i need to, even if you won't. if you want people to listen, you put money on the table. i'm gonna give you a check for $500,000. i found six struggling businesses, some weeks away from closure. my plan is to turn them around. for the next week, i'm 100% in charge. >> all right. >> let's go get to work. can't run a business if it's not clean. but i'm not just giving them advice.
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i'm putting up millions of dollars of my own money. if you don't know your numbers, you just don't know your business. i'll work by their side... i'll put in the hours... 'cause i have the same risk that they do. where's accounting? >> she's counting. >> no, where's accounting? >> um... >> oh, my god. this business is a total mess. i judge businesses based on three things: it's pretty damn good. most often, businesses fail because of people. >> i trusted people to manage. >> that's not fair-- >> what are you talking about? >> don't you even go there. >> i'm not going anywhere. >> you're strangling things. >> back up. >> i'm there to lead, but if they don't follow, this business doesn't make it. you're a thief and a liar and a cheater. >> you didn't do what you promised. >> get out of my face. all i hear is a bunch of noise. >> [crying] i don't want to lose my company. >> i'll make the tough decisions they won't. you're being demoted. anything to turn these unsuccessful businesses around. >> what the [bleep] is your problem?
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>> that people don't [bleep] want to do it anymore. >> are you challenging me? >> you're making me look like a stupid liar, and i'm not. >> how am i supposed to trust you? and if they can't cut it... i gave you very simple instructions, and you failed. the deal's off. >> this is my [bleep] town. >> you wanna lose the deal with me? they need to go, today. if they get with the program... give me a hug. i'll teach them how to succeed. >> i think him coming in here has been absolutely fantastic. >> i think it's a dream come true. >> i mean the morale is better than it's been in a long time. >> any time you want to say thank you, i'll be fine with that. >> thank you. >> i'm rescuing the american dream one business at a time. >> it just changed our look. >> congratulations. you earned it. >> it may take 30 years, but you know i'm gonna make money. >> did you actually just tell me that it's gonna take 30 years? oh, my god. tonight on the profit... >> i'm marcus. >> it's a real pleasure--thank you so much. >> nice to meet you. i go inside car cash, an auto-buying business run by two brothers in new york city, which is on the brink of failure. >> we're dangerously low on cash right now, which means i can't buy cars.
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>> if i can't fix the business... if you don't like money, don't follow my process. and the brothers' relationship... >> are you out of your mind? there's no [bleep] way! >> car cash will be closed for good. 35 years ago, bruce baron dreamt up car cash, a business that allows you to sell a used car for cash without all the hassle. the business thrived, making upwards of $50,000 a week, and bruce brought his sons jonathan and andrew into the company. >> nice to meet you. >> in 2007, the recession hit. the business tanked, and the family struggled to keep it profitable. >> my job is on the line. >> bruce passed away last year, making the situation even worse as the brothers mourn their father, struggle with business, and each other. >> i'm about to blow my top here. never tell somebody again to do
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that. >> last year, the company generated $13 million in sales, but posted a $200,000 loss. now sales are down 70% from their peak, and the brothers find themselves $200,000 in debt and counting. they've had to lay off many employees, and neither of them have taken home a paycheck in months. >> i'm in the heat of battle. i'm busy downstairs generating income! >> mounting debt, combined with lagging sales, means that they could be mere weeks away from shutting the doors on this manhattan institution. >> i'm sick of this bull[bleep]. >> i'll do anything to fix this business. >> i've been buying and selling cars since i was a teenager, and i know this business. and with over 50 million new and used cars sold in this country last year, well, i see big opportunity with the car cash brand, and i want a piece of it. if jonathan and andrew follow my lead, i will turn this place around and make it profitable again. >> good, right there is good. thank you. >> hello, good morning, warren. hi, this is malissa from 1-800-carcash,
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[dog yipping] >> hello? >> oh, hi! >> hey! how are you? >> hi, marcus. >> i'm marcus. >> hi, i'm andrew. >> andrew, nice to meet you. >> nice to meet you. this is murphy. >> where's your brother at? >> he's right in here. oh. >> good morning. >> marcus. >> i'm marcus. >> it's a real pleasure. thank you so much. >> nice to meet you. so, i want to get a little quick tour. >> right here, we're in the buying office. >> okay. >> when we buy the vehicles, we sit the customers here. this is where we negotiate all the deals. >> where do you sit, then? right there? >> yeah, they sit here, we sit behind the desk. >> wow, okay. i like the mascot. >> yeah. >> he's awesome. how many square feet do you have in total? >> uh, i think 4,500. >> which is this garage... >> yeah. >> and this? >> yeah, that's it. >> and that's it. >> and we do have a small office upstairs also. >> what's the rent here a month, 10 grand? >> [scoffs] ov--well over 20,000. almost $30,000 a month. >> almost 30,000? >> yeah. >> yep. >> space is very expensive in manhattan. having a large overhead, well, that puts a lot of pressure on a business. are both of you here every day? >> six days a week, yeah. >> you're the general manager? >> yeah, that's right. >> and your role is?
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>> marketing, internet, social media. >> what's your biggest challenge today? >> getting customers to come in. i also need working capital. we're dangerously low on cash right now, which means i can't buy cars. >> how much do you spend on advertising? >> um, between 5,000 and 10,000 a week. >> a week? and how many people actually come here a day? >> you know, some days we get five... >> yeah. >> maybe ten a day. >> and what's your buying rate? wha--how many are you buying? >> i'm in the ratio--we're probably closing, like, 80% of-- >> what's typical margin on a car? >> anything under 10,000, you have to make $500 on the car. >> that's a slim margin. >> it's a very slim margin. >> the overhead at car cash is close to $100,000 a month, and they buy about 80 cars, with an average profit of $50,000 to $100,000, which means they're losing money every single month. my first impression is that the place looks tired and worn down. >> i would love to, you know, spruce up the place. the orange is a little dated. you know, i wanted bold, vivid colors with white. it's got to pop. >> i don't think so. i don't agree.
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the orange and black works because it's striking, it stands out, and the office is very inviting. >> what office is inviting? >> the buying office. no? >> no. so, guys, i wanted to spend a little time kind of understanding the traffic that comes through here. i mean, obviously west 55th gets a ton of traffic. >> this is a fantastic location. we're basically the only outlet to the west side highway, so there are literally thousands of cars every day driving down 55th street. >> so what kind of advertising do you do? you do radio advertising? >> radio and web. >> so, you're in charge of marketing? >> for the most part. >> what--what do you mean, "for the most part"? >> well, with the radio, jon handles that, and internet-- >> isn't that marketing? >> i--this is--yes. it's--it's sort of a disconnect that we--that jon and i have. >> 50% of the business belongs to him, so my guess is that either you're not fighting for it, or he's just not listening to you. one of the two is happening. do you have experience in advertising? >> yeah, yeah. >> and what kind of things have you pitched to jon that he's just kyboshed, said no to? >> i would have a fleet of cars
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that would drive around to do mobile appraisals. that would be wrapped up in a car cash advertisement. it would be bright. it would be vibrant--the color. it would catch people's eyes. >> we never did that before. it just seems so silly. >> these are some good ideas. why aren't you fighting for them? >> you know, to be candid, there's only so many--so many times you get kicked in the balls until you stop trying. >> the baron brothers are waging their own little war, and that's bad for business. andrew needs to find his place and stake his claim. >> was this a four-cylinder or a six-cylinder? >> hey, how are you? >> hey, how you doing? >> i'm marcus. >> steven. >> both: nice to meet you. >> is this your car? >> no, no, we're wholesaling them. >> wholesaling them? you buy cars from them? >> yes. >> how many do you buy a month? >> 40 to 50. something around that number. >> that's what you're buying? >> yeah. >> wholesalers are a broker who stand in the middle of a transaction. they buy cars from jon, they mark up the price, and they sell it to a dealer. why do we need middlemen around
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here? how often is he here? >> my friend steven? >> mm-hmm. >> all the time. he's actually a wholesaler. i sell most of my cars to him. >> why? >> um, because i trust him very much. he's a good friend of mine. >> but the issue that i have is that you're giving up the spread. what did you put on the car? >> uh, 8,000. >> what did steven pay you for it? >> 8,500. >> this car will retail for what? >> i'd say-- >> 12,900? >> 12--i was gonna say, 12,999, yeah. >> how much margin is that, in between you and the final customer? >> 8,500 to 12,999, yeah. >> it's almost $5,000, right? $4,500? they're gonna go somewhere else and make--between the time you buy it to the time the final customer gets it--$4,000 to $5,000 on a car like that, whereas you only make 500. >> that's a lot of money. >> that's too much money. that's the difference between making money and losing money. >> i don't think so--i don't agree, because he puts very aggressive numbers on cars. >> he's in it to make money. >> he's in it to make money, but he--he was very close to my dad also. he's like family. >> if jon eliminated wholesalers like steven and sold directly to dealers, i think there's an extra $1,000 to $2,000 a car. and when you buy 80 cars a month, that's $80,000.
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that's $960,000 a year, without buying one more car. when a customer came in, i wanted to stand back and watch jon appraise the car. >> okay, come inside the office. >> car cash's profit is determined by two factors--how much they buy the car for, and how much they sell it for. so walk me through the process. >> i scan the car into my software. >> right. >> it brings up numerical values on the car. then from there, i take--i take a look around the car. and then i have to figure how nice the car is, how close to the book value. is it worth in excess of the book value. um, yeah, something like this, i can probably get, like, $8,500 for it. so, i'll go up from $8,000. >> okay. >> now, the next step is to actually speak with the--the customer. >> jon needs to definitely make more than $500 on average per car. >> the book value is $8,200 on the car. i'd feel comfortable paying 8,000 for it. >> um... >> right now, car cash is in real trouble. they're out of money, and if
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they don't change their process, this business isn't gonna make it. you and i have a difference in philosophy on appraisal. i like the customer with me during the appraisal. i want the customer to know that what i'm doing is fair. if i take them around the car and i point out the defects with the car, or the imperfections with the car... when these lights turn yellow, you can get this replaced. it costs 300 or 400 bucks. then when i give them a number that's lower than what they originally thought it was gonna be, their expectations are probably more in line. they're less surprised, and they feel like you're hiding less. i would rather ask these questions with them. make sense? >> i like that. i like that approach. >> you too? last year, car cash generated over $13 million in revenue. that's $13,500 per car, since they bought 960 cars. if jon followed my process and took the customer through the appraisal process, he would be able to buy cars for 5% or 10% lower than he's paying today. that's about $1,000 a car. $960,000 a year, without buying
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one more car. when you leave somebody in the office, the level of anxiety that's happening, as you sit there, as the minutes tick--oh, god. then you come back with the number? it seems like you set me up. >> i don't agree. >> look, jon and andrew are great guys, and this is a great concept, but they're hurting. and i know that if i make the changes that i want to make, this business will be profitable, but they have to listen. th--this is very simple for me. i came here to make money, and i like the concept, but the concept has to grow. for me, this is about opening more locations and signing up licensees around the country. entrepreneurs could come here and see a prototype, and then in perpetuity, forever, any licensing deal that we do, you guys will share in a percentage of those profits without having to put up a dime or do a day's worth of work. does that sound okay? >> it sound--it sounds great. >> yes. >> i'm--i'm, like, blown away. i'm...
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>> with this plan, my expectations are really simple. i look at one location. if i can buy an average of 50 cars per location, and just average $1,000 per car, i can generate $50,000 a month. after i pay my expenses, i expect to clear, after all the bills, 20,000 to 25,000 a month just with one location. you do the math, if you open 100. so the catch to this whole deal, uh, is that i have to be convinced that the prototype works. like andrew mentioned earlier, the place needs to be jazzed up. it's a little crusty and rusty. would you agree with that? the other thing that needs to change is the relationship between the two of you. do you feel underappreciated here? >> sometimes. 'cause there's times where we don't talk, we don't communicate. >> why is that? >> [sighs] you know, i have a lot of ideas. i'm full of ideas. >> mm. and good ones, too. >> i don't have time to discuss
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things for 45 minutes to an hour. it's just, i'm wired differently. like, i can't sit and talk about stuff like that. >> if you guys can't communicate as business partners, you can't be in business together. if you can't tell him what's wrong, then you shouldn't be in business together. >> [sighs] he and i really don't, you know, hang out, and... [sniffles] [sighs] i just want us to click. right now, it's not clicking. >> coming up... the catch to this deal is that i'm in charge for the next week, which means you're not in control. and later... >> the furniture that we have now, it does not match the--the decor of-- >> [bleep] your decor, man!
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>> i just want us to click. right now, it's not clicking. >> yeah, we're not clicking because when i come in here, i'm just foc--so focused on trying to make money. >> andrew, what are you thinking? >> i'll do anything to fix this business. i'm 100% committed to change. >> is your brother committed to that? >> i can't answer that. only he can. >> jon doesn't seem willing to change. but what he doesn't realize is that if he doesn't change, his business is going to fail. so the deal that i have, uh, has me writing you a check. so i'm willing to give you guys $200,000. it allows you to solve the debt that you have. it allows you to put some cash in the business and bring things
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current. and it allows you a chance, in addition to that, to collect an annuity on the brand name and the website forever. $200,000 up front and a licensing partnership going forward is a great deal for them. i mean, they're really gonna benefit. i'm gonna sign up licensees around the country, and they're gonna get mailbox money, which means every time a new car cash opens, we'll all get a check without having to put up any money or do any work. so the catch to this whole deal, uh--i want to be very clear--i'm in charge for the next week, so what i say, goes. which means you're not in control. at all. >> i don't know if giving control--you know, 100% control, basically--to somebody that, you know, we just met and, um-- [sighs] how do i put it? i'm a control freak. it's hard to let go of that. >> the business needs cash like... >> both: like yesterday. >> obviously, it's gonna take capital to change the complexion of the business.
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but we also need capital to buy cars. i don't know if $200,000 is going to be enough, so i would also like to ask for a line of credit. >> so how much is the line of credit you want? >> okay, uh, let's say, can we start with 300,000? >> what's the interest rate you're gonna pay me? >> um, is 5% fair? >> no. >> oh. really? >> really. it's 10%. i need 10%, because it's unsecured. >> well, it's unsecured, but you have to understand something. we're giving you an opportunity to make millions and millions of dollars. >> but i'm--but i am putting up all the money. >> you're putting up all the money, but you're putting up the money based on the idea that our dad created. and it's his vision, and his blood, sweat, and tears that got us to this point and built the name brand that you're gonna make millions of dollars on. for the sake of both of us, we need to do good business here. we need to make a lot of money here. we're your flagship. you need us--you need us to be the most successful franchise that you have. if we're not your most successful one, then nobody is gonna buy in.
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>> one of the things i like about jon is that he's willing to push back. right after i give him $200,000, he then comes back and asks for another $300,000 for working capital. i mean, i thought it was bold, but i like that about him. it shows me he has some fire in his belly. i'll split the baby with you at 8%. >> how about 7.5%? >> okay, we got a deal. >> yep. >> so when you take my check, for the next week, i'm 100% in charge. which means, what i say, goes. do you understand that? >> yep. >> you better buckle up... >> yeah. >> because change is coming. once i make a deal, i don't waste any time. i'm gonna turn this place upside down. do we have a deal? all right. do we have a deal? >> sounds good. thank you so much. >> let's get to work, right away, okay? hey, everybody! i wanted to tell you what has happened. very exciting news. jon and andrew and i have cut a deal where i'm now going to be
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part of car cash. i'm a big believer in three things--people, process, and product. i think we have the right people, but we need to make some improvements. look, i didn't come here today to do one single business deal on west 55th street. i came here because i think 1-800-carcash should be a national brand. we're gonna add licensees around the country who are going to pay us a fee to license 1-800-carcash in an area that's relevant to them. in order for this business model to attract licensees, we're gonna have to show them it's profitable. they're not just gonna buy off on an idea. so one of the first things we need to do is make more money. we need to fix the appraisal process by bringing the customer into it so we can buy our cars for less. jon, the wholesalers have to go. more importantly, we need to get rid of these wholesalers, because we need to make that extra money that they're making between here and there. that extra money could be $1,000 a car. if we can fix this business,
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then licensees are gonna love it, and they'll sign up like it's going out of style. if we're going to be a national brand, we're going to need to look like a national brand. as part of building a prototype, i need to do an entire overhaul of the building, but not just the building. we also have to change the appearance, because appearance is one of the most important things in business. we need to make sure that we look as good as we sound. let's go to work. [claps] all right? let's go. one of the things that i wanted to do before my team shows up tomorrow and starts gutting this place is i wanted to get some ideas for what you'd like to see happen. >> if we could freshen up the-- maybe get a new awning, i would make everything consistent. i would love to redo the floor. right now we have this, like, it's sort of an epoxy paint. i would love to do the entire garage in epoxy paints. so that way it's easy to clean-- >> that's a terrible idea. the sound of it when you walk on it, it's gonna sound like corduroy pants swishing together. absolutely not, man. >> sometimes my brother will just, like, tune out what i'm
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saying, and it's extremely hurtful to me because i have valid ideas. these are--these are ideas that would save the [bleep] business! so this is our lovely bathroom. there's a leak in the pipe here, uh, the seat is loose. i don't like being in here. [laughs] >> how do you think the customers feel? >> i would not feel very comfortable if i was a customer. i just don't want to get into arguments with my brother anymore. he doesn't want to spend the money to do anything internally because he's so focused-- i understand he's focused on that thing. there's a lot of things i want to focus on. >> andrew is an equal owner in this business, and it's time he stood up to his brother. he should be free to do his job, and he needs to demand it. >> jon, do you ever listen to any of his ideas? >> i listen to some of them. >> but he's your brother, who owns half the business. >> he's my brother, and i love him, but i ca--i don't have time to listen to a lot of these ideas. >> i'd like to hear some of his ideas. i mean, let's hear what he has to say. >> i want to start advertising with zipcar, and--and doing some cross-promotional advertising with them. >> what's the--what's the next idea? >> no, that's a valid idea. >> that's a great feature to
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have after the sale, but doesn't generate people coming in here. >> there's marketing, there's advertising, and part of advertising is the radio. >> it's--honestly, drew, it's like--this is like a broken record to me. i don't feel comfortable with it, i'm sorry. >> andrew is supposed to be in charge of marketing and advertising, and car cash spends between $20,000 and $50,000 a month. most of that is spent on radio. now, jon won't let him control the radio, so really, in the end, andrew is in charge of nothing. i want to hear you tell him why radio is the right thing for you. boom! hit the spot. >> radio is really, really important. it's a way for us to connect with our--with our customers. we need to learn how to communicate with them. >> okay, i did all that, though, and i got us killer deals doing that. what are you gonna do differently? >> i--the creative. >> okay, basically you want to rest--the single biggest cash-bringing option that we have, you want me to rest that in your hands. you want to write the copy. you want to handle the media buying, when you've never done it before? >> yep. >> are you out of your mind? that's a [bleep] waste of time.
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>> look, jon, i don't like the way you talk to your brother. you--you probably are one of the better car guys i've ever seen, but you are one of the worst managers of people that i've ever seen. maybe there's excuses and there's reasons and there's all these other things, but i think one of the things that i have to get convinced of is that you can actually manage people. i'm not gonna let you down. coming up... hit it like you mean it. >> [bleep], this is hard! >> and later... this is new york city. this is my [bleep] town, okay? i know what goes on here. >> you don't know anything. you've got till the end of the day. they go, or i go. [ male announcer ] these days, a small business can save by sharing.
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get this right. i had estimated 200,000, but when licensees come here, i need to know we are absolutely putting our best foot forward. so let's go inside and take a look. >> wow. andrew, come here, buddy. how frustrated have you been that your brother won't let you do stuff? >> pretty frustrated. >> let me see it. hit it like you mean it, though. >> harder! >> [bleep], you guys do this all day? marcus wrote a check for $200,000 and counting. i gotta live up to his standards. >> hey, hold up for a second. >> what's up? >> did you order $7,500 worth of new furniture for the office?
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>> yeah. >> i'm--i'm--to say i'm pissed would be an understatement. you should never have spent that money without asking me, because i'm controlling the budget. you're totally out of line. what's your explanation? >> the furniture that we have now, it does not match the--the decor of--of the new way-- >> oh, [bleep] your decor, man! there's no [bleep] way you ju-- you're gonna spend $7,500 on furniture for the office. >> all right, i-i get that, and i understand why you're upset, but at the same time, this is part of--part of my field. this is--i-- >> your--your field? totally absurd. don't spend money on pretty things to make the office look nice. next time you want to make a $7,500 purchase, you better come to me first. that's number one. number two, you better call this furniture company and cancel the order. i've had it, man. i'm [bleep] done with this conversation. >> come here for a second.
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>> yes. >> why was your brother yelling at you? is it okay with you that he does that to you? >> no, it's--of course it's not okay. >> then why do you allow it? >> you know, there's a certain level that he's, like--eh, he's my older brother and, you know, i-i listen to him. >> andrew has a lot to offer this business, and jon better start recognizing. if this business is gonna succeed, jon's behavior has to stop. hey, jon? >> yes? >> why am i hearing from some of the painters that you were yelling at your brother earlier? >> i got upset because he okayed to purchase furniture-- >> but i'm paying for the [bleep] furniture. i'm paying for it. >> well--but, your money-- >> how much do you think i've spent? >> $1/4 million? >> more. how much was he asking you to spend? >> i don't know, a couple thousand dollars. >> okay, so your brother goes out on a limb to improve what you think is gonna be a couple thousand dollars... >> right. >> and you lose your mind? it's not about the furniture, but it's about showing some respect to him. you're more concerned about this than you are him. >> that's not true. >> well then why do you treat him that way? >> but, it's one situation-- >> i know, jon. >> but it--but, marcus, it was--
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>> jon, he's a human being. forget about the fact that he's your brother. we shouldn't be talking to people that way. in a situation like this, these brothers need to be working together, not working against each other. >> i didn't mean to embarr--i-- if i embarrassed you, i'm sorry. >> i wanted to get out of the office a little bit and spend some time with andrew. i have a surprise for him. i've been very impressed with all your ideas. you're willing to take some chances. >> thanks, marcus. >> so what i did is, i went out on a limb, and i don't want jon to know about this. >> about what? >> i hired some people... >> uh-huh. >> that are gonna give you the chance to go into a studio for three, four hours, and you're gonna be able to make a 15- and a 30-second radio and tv spot. >> wow. >> and it's 100% up to you. >> wow, that's amazing. thank you. >> got to get it right the first time. you get a chance, without your brother influencing you... >> right. >> to get something done, and
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come back and say to him, "look, you said i didn't know how to make a commercial. here's my spot." i hope that jon will finally see that andrew has a lot to offer this business. >> i-i definitely feel pressure. he doubts me. in his mind, he doesn't see me, uh, accomplish anything. >> nothing shuts people up like performance. >> performance and success. >> performance and success. let's go get to work. >> you got it. >> hey, how you doing? >> hi, how's it going? >> what's up? i'm jon. >> i'm jake. >> nice to meet you, jake. so what's cooking? >> i'm just interested in selling my car. >> so, what do we have here, a 2011? >> yeah. >> okay, what's the mileage? >> oh, it's about 26,000 miles. >> okay, let me take a quick look around the car... >> yeah, sure. >> and we'll figure it out, okay? you just hang tight. if i gave 16,000, you'd pay 17,000 for it? what do you think? >> yeah, i would.
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>> yeah, that's what--that's what i thought. >> i think i would, yeah. >> yeah, the wheels need some reconditioning. >> yeah. >> jon is outside appraising a car, and i see two wholesalers hovering around the car. i thought we were past this. are you, uh--are you selling this car? >> no, i'm just a buyer. >> no, no, he's not the customer, they're-- >> we're buyers. >> what do you mean, you're buyers? >> tried to buy the car. >> okay, these--these are the wholesalers. >> guys, give us a minute. let me talk to him a second, okay? >> yeah, okay. >> i can't believe this. i told jon specifically to get rid of these wholesalers. having them here is costing this business hundreds of thousands of dollars. if he doesn't change his ways, he's going to put himself out of business. hey, look, i don't know if you thought this was my first rodeo, but my job here is to make money, for myself and for you. i don't get it. they're taking [bleep] margin right out of your pocket. >> okay. >> do you not see that? >> who the hell am i gonna sell my cars to? >> dealers. >> these guys are great buyers. they know how to look at a car. they're great with people. >> then hire 'em! >> i'd love to hire them.
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>> then why don't you? >> because i need them to sell cars too, also, because they pay me a lot of money, too, for cars. >> but, they're tak-- >> and they're honest guys. these guys aren't dishonest. they're honest guys. >> it's not about them being honest or dishonest, it's about having the fox in the henhouse. it doesn't make any sense to me... >> but they're not the fox! >> that you make your living... >> they're not the fox. >> off of selling cars, and the margin between those cars. >> okay. >> if you buy a car for 10,000, you don't know what the market is. you sell it to them for 11,000, they're selling it for 12,000. the only reason they're here is because they make a spread between you and the next person. >> time out. in your world, maybe that's how it works, okay? but in my world, it's different, okay? this isn't bakersfield, california, this isn't dallas, texas, this isn't chicago. this is new york city. this is my [bleep] town, okay? i know what goes on here, and i know my guys. don't tell me about my guys. >> you don't know anything. you've got till the end of the day. they go, or i go. coming up... >> i-i have to cut you guys out. >> that's your final decision?
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>> and later... >> selling your car? >> both: no. >> selling your car? >> both: no, no, no, no. >> you've got to get it right. >> selling your car? the great outdoors... ...and a great deal. thanks to dad. nope eeeeh... oh, guys let's leave the deals to ooh that one! nice. got it! oh my gosh this is so cool... awesome! perfect! yep, and no angry bears. the perfect place is on sale now. up to 40% off. only at i'm in my work van, having lunch, next minute i'm in the back of an ambulance having a heart attack. the emts gave me bayer aspirin. it helped save my life.
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i was in shape, fit. i did not see it coming. my doctor recommends i take bayer aspirin to help prevent another heart attack. [ male announcer ] aspirin is not appropriate for everyone so be sure to talk to your doctor before you begin an aspirin regimen. i've lived through a massive heart attack. i don't take life for granted. see your doctor and get checked out. ♪ riding the dog like it's a small horse is frowned upon in this establishment! luckily though, ya know, i conceal this bad boy underneath my blanket just so i can get on e-trade. check my investment portfolio, research stocks... wait, why are you taking... oh, i see...solitary. just a man and his thoughts. and a smartphone... with an e-trade app. ♪ nobody knows... [ male announcer ] e-trade. investing unleashed.
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>> got to paint the whole hood. >> hey, guys, i've got to talk to you for a second, sorry.
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>> okay, man. >> look, i've got to make some changes around here. this is not gonna be easy for me because, i mean, i'm very loyal to people. i just can't have you guys here anymore. i'm sorry. i-i have to cut you guys out. >> we've been here since your father was around. >> i know. >> and we've been doing business with him from--for years. >> i'm sorry, man. it's--it's nothing personal. i have to stay afloat. i have to stay alive, here. >> so that's it for now, right? that's your final decision? >> you guys have to go. sorry. >> you know what, man? forget about you, all right? >> is this you changing your way of doing business? >> i'm changing everything. i'm doing a 180. >> it's your business. you gotta do what you gotta do. >> it's hard to cut ties with people you've done business with for years. but in order for this business to survive and make real money, the middlemen, the wholesalers, have to go.
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[engine roars] today i'm taking andrew to the recording studio to make this commercial. i am really excited. so, andrew, you ready for this? >> i am ready. >> did you write the spot? >> absolutely. >> let me see it. what i'm really proud of is that andrew did a good job preparing for this. he wrote out the script. he timed it. he put a lot of thought into the words. i'm--i'm thinking he's gonna do a great job. oh, hey, doug. >> hey. >> good seeing you. >> how's everything? >> here's andrew. >> andrew. >> hi, i'm andrew. >> pleasure to meet you. >> why don't we head on in? is that all right? you ready? >> yeah, let's do it. >> we just need to make sure that whatever we do today, it's tight and it's fast and you're on point, okay? >> yep. >> all right, let's get started. >> i'm ready. >> okay, we're rolling whenever you're comfortable. >> selling your car? then call 1-800-carcash. >> we're gonna stop. we're--we're gonna stop. that "selling your car" is too soft. >> all right. >> strong, andrew. [forcefully] selling your car? >> all right. selling your car? >> both: no. >> selling your car? >> now, instead of going down, i want you to stay up and strong all the way through.
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[forcefully] selling your car? >> selling your car? >> no. >> selling your car? >> both: no, no, no, no. >> gotta get it right. it's really about him getting his confidence. >> yeah. >> right? >> yeah, being comfortable. >> it's got to sound like you're pissed. >> okay. it--it takes a long time for me to get pissed, so... >> well, the boss is coming, and the boss is pissed, so it's not gonna take too much longer. >> i want you to read this like your brother just told you you were a dumbass. >> oh, great. let's go. [angrily] selling your car? >> i could work with that. >> yeah. that feels better. >> yeah. >> that feels better, andrew. >> oh! again? >> read it that way. be pissed. >> no hassle. >> no hassle! >> no hassle! >> screw off! >> no hassle! just instant cash! >> nice. >> that was good, andrew. great job. >> very much. >> the manhattan car cash location is gonna be my flagship. it's my prototype.
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it has to be right. it's gonna set the standard for every other licensee and location that opens in this country. we're rebuilding all of the offices to maximize the space better. we're redoing the uneven and dirty floors. we're painting the walls and ceiling with the new colors. we're replacing the entire storefront so that customers can see in, and employees can see out. this isn't shatterproof. >> yes, it is. >> it is? >> oh, yeah. >> we're replacing the dilapidated awning with a bright new one. what if we put some plexiglass, their logo... >> strong colors--right. >> backlit. >> that works. >> let's do it. we're improving the lighting so it's more inviting, and we can see the cars better. is this as bright as it's gonna get? >> we're actually in the process of changing those out right now, and then you can tell me if you want to add more. we're updating the electricity and the wiring. we're rebuilding the bathrooms from scratch, so the customers and the employees aren't scared to use them. and we're adding a new sales area, so the customers can feel like they're part of the process. hey, jon, come on over. >> wow.
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>> when you license a business, you have to also license your image, so i've rebranded the company, including getting uniforms for our employees. it's--it's a totally different feel. we look legit. >> i'm very happy with the progress. i spent way more than expected. i've spent over $350,000, but i know it's got to be right if this is the prototype. i'm confident that i'm gonna get my money back after four or five licensees, and after that there's going to be a really nice profit. >> it's clean, it's bright, it's very professional-looking. i mean, this is a can't-miss. >> to say that this is a transformation is an understatement. [exhales sharply] it's, uh, quite overwhelming. i-i wish my father was alive to see this, to show him his new... i wish he was here. he would have loved this. he loved this place so much. this was his baby.
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faster than ever. ♪ it's time to do everything better than before. the new blackberry q10. it's time. >> it's now time to see what jon has learned about doing appraisals. i expect him to make a bigger profit. the whole process, okay? >> yeah. hey, guys. >> hey. >> how you doing today? my name is jon. what's your name? >> vic. >> vic, nice to meet you.
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>> i'm lizzie. nice to meet you. >> nice to meet you, too. pleasure. let me explain a little bit about what we do here. >> sure. >> we'll take a look at the car. i'll scan the vin number. i'll assess a value to the car. i hope i can meet your expectation levels. what were you guys trying to get for it? it--it's not what a book says a car is worth, it's what someone offers you for the car. so, let's start in the front of the car. i happened to notice when you guys were pulling in, there was a little--there's some damage on the bottom. >> yeah. >> some scrapes. i notice the wheels are a little scuffed also. that's, like, the only rim that didn't get damaged. on most cars, it's not the end of the world, but unfortunately on a bmw, you know, four rims could cost well over $1,000. clean history, good. >> yeah. >> we have a little reconditioning to do around the car. based on what i just pointed out--the rims, the bumpers--i'd like to pay 14,000 for it.
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>> yeah. >> okay. >> jon did a great job on the appraisal. he held firm with the customer, and now he's doubling his profit on that purchase. i'm introducing jon to an auto dealer in new jersey. i have high expectations that he is gonna dramatically increase his margins. i'm expecting him to make $3,000 to $4,000 more per car. >> hey. >> how's everything? >> michael. what's up? >> hey, michael. marcus. >> pleasure. >> hey, nice to meet you. >> how are you? >> a beautiful bmw for you. what do you think? >> i got to look at it. >> it's definitely frontline material. >> as long as the number is good, we're in. >> '07, mileage in the 60s. take a look. >> do you mind if i take a look? >> go ahead, go ahead. >> okay. okay. >> the car ran brand-new. >> yeah, these usually do. >> cold a/c, paint is still-- >> they usually do run great. >> [clears throat] good tires. >> it's all up to the number. >> i'm gonna put you on the money. i want to start this off right. 17,500. >> i was thinking more closer to 16,000. would that work?
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>> it would work if the car wasn't so nice. it was an original owner car. the customers took very good care of this car. >> but it's not like a 30k or 40k. it has 60,000 miles. >> it's retail-ready. 17,500. come on, man. >> 16,500, tops. [ male announcer ] these days, a small business can save by sharing. like carpools... polly wants to know if we can pick her up. yeah, we can make room. yeah. [ male announcer ] space. yes, we're loving this communal seating. it's great. [ male announcer ] the best thing to share? a data plan. at&t mobile share for business. one bucket of data for everyone on the plan, unlimited talk and text on smart phones. now, everyone's in the spirit of sharing. hey, can i borrow your boat this weekend? no.
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[ male announcer ] share more. save more. at&t mobile share for business. ♪ a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
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>> 17,500. come on. >> 16,500, tops. >> wow. it's got a clean vehicle history. the car is retail ready, brand-new tires. maintenance records, one owner. >> i'll go 17,500, just 'cause it needs nothing. >> i really want to get 17,500. i'll go 17,200.
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and, you know what? i'm gonna bring you more retail-ready cars. this is the first of many. >> all right. you got it. i'll take it. >> okay. >> thanks for your business. sure appreciate it. thank you. car cash used to sell their cars to wholesalers for a measly $500 profit. this transaction generated $3,200 of profit. that's a 640% increase over what they used to do. with this new process in place, it's only a matter of time before car cash is really profitable. >> thank you. >> thanks again. [knock at door] >> come in. >> hey, you got like 30 seconds or so? >> sure, of course. what's cookin'? >> wanna show you something. >> male announcer: selling your car? 1-800-car-cash is the fastest and easiest way to sell your vehicle since 1977. whether you're selling your car, truck, or suv, visit and get a free cash appraisal
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now! or call 1-800-car-cash for a location near you. >> [laughing] wow. that was fantastic, man. >> thanks. thank you. >> really, wow. >> it's, uh... >> it's an emotion experience. >> yeah. you learn to value his judgment, because i did doubt it, you know? and--and, uh, this--this, along with probably 1,000 other things over the past couple weeks have literally proved me wrong. and, uh, i feel humbled, you know, to be honest. >> what would your dad say? >> he would go crazy for that. >> i knew, if someone gave me a chance, that i could shine, man, you know. >> yeah. >> you certainly did, man. i'm on team andrew, believe me. it was great. >> i feel incredibly proud of what i've accomplished. i feel that i have proved to my brother that i have what it takes to make this business, uh, thrive via my creativity. >> what do we have to pay him in royalties for using his voice? >> zero. >> whew.
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>> car cash is now flourishing. andrew's tv spot is running, and as a result of the new marketing plan, transactions are up 30%. john is now following my procedures on appraisals and selling cars. this has led to a $2,000 increase in profit per car. we've added a call center, mobile marketing vehicles are on the road, and licensees are opening up locations as we speak. >> i like the idea that it's been open since 1977, doing the same thing, you know... >> so is this something you'd like to sign up for? >> how do i sign up? where do i get started? what do i gotta do? i'm interested. >> most importantly, the relationship between andrew and john is on the mend, and things are headed in the right direction. with these basic changes, car cash is now profitable. i am confident that car cash and these two brothers are going to be wildly successful, something their father would be very proud of.
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>> announcer: the following paid program is sponsored by great healthworks. the opinions and views expressed are those of the program's sponsor and do not necessarily reflect the opinions and views of cnbc. the following is a paid advertisement for omega xl. >> my name's larry king. a few years ago, i had to have open-heart surgery. when i recovered, i established the larry king cardiac foundation to help people like me avoid heart problems with proper foods,


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